Tips you Should Know Before Jumping into Forex Trading
1. Gamblers visit the casino but unproved and spontaneous Forex trading actions is also similar to pure gambling. Your attempt to trade without studying and analysing the market is comparable to a game that can be fun till you lose real cash.
2. It is best to practice on a Forex Demo account before investing into an actual Forex account. Give a minimum of 2 months to demo trading. In fact 90% of all starters are not successful in the actual cash market owing to lack of discipline, knowledge and practice.
The remaining 10% of the successful traders are those who have been sharpening their expertise on demo accounts for several years before playing in the real game. A good demo practicing account like FXGame from Oanda will be helpful for beginners.
3. Move with the trend as this is your friend. Trade with the movement which maximizes your probability to succeed. If you trade against the trend it may not “kill” you but will surely need concentration, stress as well as intelligent skills to achieve lucrative trading objectives. Don’t sell when the trend is bullish and don’t buy when the trend is downwards.
4. It is best to look at the time frame that is bigger than the one you have selected to trade in. This offers a larger market price movement picture which helps to define the trend clearly. To give an example, when trading with a time frame of 15 minute, look at the 1 hour charts. Similarly when trading with 1 hour you must get a daily and weekly picture of price movements. When it is tough to spot a trend in Forex, select a larger time frame. You will always find the up and down market patterns and ensure that you understand the
overriding trends, except you are a scalper. Scalpers don’t need to study big trends, but look at what is happening in the market in the present with a 1-5 minute time frame.
5. It is highly avoidable to risk over 2 or 3% of your total trading account. A key difference between a successful and unsuccessful trader is the ability to survive unfavourable market situations. An unsuccessful trader may lose his account with 0-15 unprofitable trades in a sequence. Even in an identical trading system two traders can get reverse results and the difference is in the way money is managed. A quick fact to remember is money management, losing half of your account balance entails generating 100% return just to
get back the original balance.
6. Play down the emotions and trade calmly. Avoid taking revenge if you lose a trade and don’t be insatiable by including additional positions when you are winning. Keep in mind that overreaction stops clear thinking and may result in loss of cash. By overtrading you wobble your money management which considerably enhances trading risks.
7. Select time frames best for you to ensure that you remain secure and have sufficient time to analyze the place market, close orders and more. There are individuals who are not able to wait for hours for things to move and prefer smaller time frames. While others
find 10-15 minutes a hustle to take correct decisions.